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JOHNSON v. UNITED STATES

October 28, 1983

GAYFRYD McNABB JOHNSON, Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant.



The opinion of the court was delivered by: POLLACK

MILTON POLLACK, District Judge.

The plaintiff, a taxpayer, sued herein on September 8, 1983 to abate a jeopardy tax assessment which the Internal Revenue Service leveied against articles of ladies' jewelry, certain artworks, and other property on June 22, 1983. The abatement was sought pursuant to the special statute governing summary judicial review of jeopardy assessments, 26 U.S.C. § 7429.

 The government, on the eve of a hearing at which this Court was to have adjudicated the question of the validity of the jeopardy assessment, capitulated and stipulated, on September 27, 1983, to abate the jeopardy assessment against "plaintiff's property," which the parties explicitly described in their stipulation as the jewelry, artworks, and other property referred to above. *fn1" The parties in open court on September 27, 1983 requested an order accordingly, and the stipulation was "So Ordered," signed and entered on September 27, 1983.

 The plaintiff now seeks an order of contempt against the government, charging deliberate distortion and violation of the stipulation of settlement in respect of the ladies' jewelry and artworks. For the reasons expressed in this opinion, the plaintiff is entitled to certain relief.

 The background is instructive.

 At the threshold, two things should be made clear beyond peradventure of doubt: (1) that the tax liability asserted against the plaintiff, which is being litigated in the Tax Court of the United States, is in no way in issue nor affected by anything within the narrow scope of this case and nothing herein is intended to suggest that any of the ladies jewelry or art previously leveied on as "plaintiff's property" (as defined in the government's stipulation) is now, or will ultimately be, beyond the reach of any enforcement of tax liability found against plaintiff; *fn2" (2) that nothing stated in this opinion suggests that the government waived or intended to waive herein any rights that it may have against property of plaintiff's husband, Norman Johnson. Emphasis thereof in the government's arguments is only diversionary herein. The only property dealt with by this Court is the property which the government's written stipulation defined as "plaintiff's property," and the only question presented to this Court was whether the I.R.S. had a reasonable basis for asserting the provisional remedy of jeopardy assessment (attachment) of property claimed by the plaintiff as hers.

 With those two caveats out of the way, we proceed to the brief history of this case.

 Factual and Procedural Background

 Plaintiff is the estranged wife of Norman Johnson, a resident of New Orleans, Louisiana. Norman Johnson was convicted of tax conspiracy and is presently imprisoned pursuant to a sentence of imprisonment imposed in February, 1983. In the following month, March 1983, plaintiff sued Norman Johnson in Louisiana state court for divorce; that suit, and Norman Johnson's counterclaim therein, is presently pending, undetermined.

 On February 4, 1983, the government, pursuant to 26 U.S.C. § 6861(a), issued a jeopardy assessment of over $4 million jointly against plaintiff and Norman Johnson for taxes due on unreported income for the years 1976 through 1979. Plaintiff and Norman Johnson had allegedly filed joint tax returns for those years.

 On February 11, 1983, the IRS seized the marital home of plaintiff and Norman Johnson and its contents in New Orleans. Notice of such seizure was issued in the name of "Norman L. and Gayfryd Johnson", as was the corresponding levy, also dated February 11, 1983, which indicated an amount due the IRS of $4,218,121.50.

 On or around March 9, 1983, plaintiff's counsel furnished the IRS with a list of ladies' jewelry located in a safe deposit box held in the name of Jack Martzell, Esq., a local, family attorney, and an inventory of art works on loan to the New Orleans Museum of Art. Notices of levy, dated March 10, 1983, were sent to Mr. Martzell and the Museum, levying upon all property in their possession belonging to the taxapayer "Norman L. and Gayfryd Johnson."

 The documents indicate that the February 11, 1983 levy and seizure and the March 10, 1983 levies were pursuant to the February 4, 1983 jeopardy assessment issued jointly against plaintiff and Norman Johnson.

 The plaintiff, in her individual capacity, brought on an application for administrative review of the jeopardy assessment against her; this was denied in March, 1983, and in April 1983, plaintiff in her individual capacity filed a suit in the United States District Court for the Eastern District of Louisiana challenging the jeopardy assessment of February 4, 1983, pursuant to 26 U.S.C. § 7429(b)(1), on the ground that it was technically deficient. The New Orleans court consolidated that action with a similar one brought by Norman Johnson. On June 22, 1983, the Honorable Henry A. Mentz, in the New Orleans federal court, ordered the IRS to abate the February 4, 1983 jeopardy assessment, but only as against plaintiff herein, and without prejudice to the ...


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